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21 Aug 2018
'The increase reflects continued strength in markets across Europe' - Arla announces October price rise
It takes Arla’s standard manufacturing litre price to 32.3ppl.
Alex Black
It was due to a one eurocent increase in the on-account price coupled with the quarterly adjustment in the currency smoothing mechanism.
The increase is a 0.84ppl increase in its UK standard conventional manufacturing litre with a 0.66ppl increase from new quarter’s average exchange rate.
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Arla Foods amba board director, Johnnie Russell, said: “This is the fourth consecutive increase in Arla’s milk price, totalling 4.56 pence – a 16 per cent increase in our price since the beginning of July. The increase reflects the continued strength in the markets across Europe, particularly for fat-based products.”
Reaction
Arla farmer and NFU dairy board chairman Michael Oakes said the increase was only to be expected with where the market was.
“The influence of the Arla price has a disproportionate effect. When the price goes up, it is positive news for more than just Arla farmers.”
He highlighted the impact of the currency smoothing mechanism, with it contributing 0.66ppl of the 1.5ppl increase.
“It is something which has had its pluses and minuses. Every quarter of currency at the moment, it helps.”
Positive
NFU Scotland milk policy manager George Jamieson said it was positive news and he hoped it would carry on going up.
“Farmers have been through a really tough two years. Speaking to my farmers, they have not been able to rebuild that balance sheet.
“Farmers are looking for a return from the supply chain just to build that confidence. A lot will not have invested in that time. It is essential they come through with that to encourage folk to carry on into the winter.”
He added it should put pressure on other processors to now increase their prices and repeated calls for processors to pay out as much as they can, not just what they had to as it would inspire farmer loyalty.
Mr Oakes added there was still a disparity with the prices being paid on the continent compared to in the UK but this gap was now closing.
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